Directors of the California Association of Realtors? (CAR) recently received a preliminary report from their Ethics and Professionalism Task Force.? One part of the recommendations had to do with professional competence.? Some of those recommendations were related to various licensing requirements that are overseen by the Department of Real Estate.? Those recommendations would require state legislative action.?
One proposal, though, dealt with issues solely within the jurisdiction of local, state, and national Realtor? organizations. It said, ?Article 11 of the Code of Ethics that requires competent representation shall be promoted and enforced; those not practicing competently will be disciplined and sanctioned.?? Easier said than done.
Article 11 of the Realtor? Code of Ethics says in part, ?The services which REALTORS? provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected in the specific real estate disciplines in which they engage?.? As it stands, the article is quite clearly directed at Realtors? who might be inclined to take on a project that is outside their area of expertise.? Examples of such are legion:
- A luxury property specialist learns that a fellow country club member is planning to sell his chain of gas stations.? ?Sure, I can handle that for you,? he confides over refreshments at the 19th hole.
- An industrial broker offers to handle the sale of his aunt?s residence in a seniors-only, stock cooperative community.? ?I?ll just put it in the MLS like everyone else does.? How difficult can that be??
We could go on and on.
Lack of competence is not exclusively a matter of operating out of one?s field of practice.? Believe it or not, there are agents who stick strictly to one type of real estate transaction ? it might even be residential ? and who still lack competence.? Nor is this necessarily a phenomenon to be found among those who consistently do one or two transactions a year; although it might be more prevalent in that cohort.? Many of us have also experienced what we might call<i>incompetence </i>in the behavior of some very high producers.
There is a certain sense in which incompetence exists in the eye of the beholder.? And it may be more like obscenity, of which Supreme Court Justice Potter Stewart famously said, ?I know it when I see it.?? It eludes easy definition.
The Realtor? Code of Ethics is supplemented by Standards of Practice and by Case Interpretations.? These are provided in order to provide interpretations and explanations of the Articles which tend to be written in very general terms.? In the case of Article 11, there are four Standards of Practice.? In this instance, the applicable one is Standard of Practice 11-2:
2. The obligations of the Code of Ethics in respect of real estate disciplines other than appraisal shall be interpreted and applied in accordance with the standards of competence and practice which clients and the public reasonably require to protect their rights and interests considering the complexity of the transaction, the availability of expert assistance, and, where the REALTOR? is an agent or subagent, the obligations of a fiduciary.
It?s fair to say, though, that this still leaves a lot of room for questions and dispute.? Moreover, and unfortunately, the Case Interpretations under Article 11 are not very helpful.? Currently, there are 8 such cases, and they all deal with issues related to appraisals.
Bringing a lack-of-competency ethics charge based on Article 11, and imposing discipline for a violation, will be a dicey enterprise at best.? Hearing panels and associations may be reluctant to act against an agent who is duly licensed and considered, therefore, competent in the eyes of the state regulatory agency.
If the task force recommendations with respect to Article 11 are to be implemented, local associations and hearing panels will need more guidance from the National Association of Realtors? (NAR) in the form of additional Standards of Practice and Case Interpretations.? Which would be nice to have anyway.
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About the Author: Bob Hunt of San Clemente is a ?Broker-Owner, Author, Realtor-Director, Ethicist, Grandfather and Friend of Duane Gomer, ?He excels in all of those.?
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